Culp Announces Results For Second Quarter Fiscal 2017

Culp, Inc. (NYSE: CFI) today reported financial and operating results for the second quarter and six months ended October 30, 2016.

Culp, Inc. (NYSE: CFI) today reported financial and operating results for the second quarter and six months ended October 30, 2016.

Fiscal 2017 Second Quarter Highlights

Net sales were $75.3 million, down 2.1 percent, with mattress fabric sales up 0.2 percent and upholstery fabric sales down 5.4 percent, as compared with the same quarter last year.

Pre-tax income was $7.2 million, up 16.5 percent compared with $6.1 million in the second quarter of fiscal 2016.

Net income (GAAP) was $4.5 million, or $0.36 per diluted share, compared with net income of $3.8 million, or $0.30 per diluted share, in the prior year period.

Adjusted net income (non-GAAP) was $5.9 million, or $0.47 per diluted share, for the current quarter, compared with $5.2 million, or $0.41 per diluted share, for the second quarter of fiscal 2016. (Adjusted net income is calculated using estimated cash income tax expense. See the reconciliation to net income on page 6).

Cash and cash equivalents, short term investments and long term investments held-to-maturity totaled $47.4 million, up $5.3 million from last fiscal year end, with no outstanding balance on the company's line of credit as of October 30, 2016. The $47.4 million was achieved despite spending $10.6 million on capital expenditures and dividends during the first six months of this fiscal year.

The company announced a 14 percent increase in its quarterly cash dividend from $0.07 to $0.08 per share, or $0.32 per share on an annualized basis, commencing in the third quarter of fiscal 2017.

Fiscal 2017 Year to Date Highlights

Net sales were $156.0 million, down 0.7 percent, with mattress fabric sales up 3.0 percent and upholstery fabric sales down 6.1 percent compared with the same period a year ago.

Pre-tax income was $15.7 million, compared with $13.6 million for the same period last year, representing a 15.9 percent increase.

Net income (GAAP) was $9.8 million, or $0.78 per diluted share, compared with net income of $8.5 million, or $0.68 per diluted share, in the prior year period.

Adjusted net income (non-GAAP) was $12.9 million, or $1.03 per diluted share, compared with $11.4 million, or $0.92 per diluted share, for the prior year period.

Annualized consolidated return on capital was 34 percent, compared with 32 percent for the same period a year ago.

Capital expenditures for the year to date period totaled $6.3 million, almost all of which related to the mattress fabrics segment, compared with $5.3 million a year ago.

During the first half of fiscal 2017, the company paid $4.3 million in dividends, of which $2.5 million was for a special dividend. Since June 2011, the company has returned a total of $44.0 million to shareholders in the form of regular quarterly and special dividends and share repurchases.

Financial Outlook

The projection for third quarter fiscal 2017 is for overall sales to be flat to slightly lower than the previous year's third quarter. Pre-tax income for the third quarter of fiscal 2017 is expected to be in the range of $6.7 million to $7.3 million. Pre-tax income for the third quarter of fiscal 2016 was $7.2 million.

Overview

For the second quarter ended October 30, 2016, net sales were $75.3 million, compared with $77.0 million a year ago. The company reported net income of $4.5 million, or $0.36 per diluted share, for the second quarter of fiscal 2017, compared with net income of $3.8 million, or $0.30 per diluted share, for the second quarter of fiscal 2016.